Sectional Test for Bank Exams (Set - 7)

Mentor for Bank Exams
Sectional Test for Bank Exams (Set - 7)
Directions (1 – 10): Read the following passage and answer the questions that follows.
TEN years ago this month investors were pretty confident. True, there were signs that problems in the American housing market would mean trouble for mortgage lenders. But most people agreed with Ben Bernanke, the Federal Reserve chairman, that “the impact on the broader economy…seems likely to be contained.” The IMF had just reported that “overall risks to the outlook seem less threatening than six months ago.”
That was reflected in market valuations. In May 2007 the cyclically-adjusted price-earnings ratio (CAPE), a measure that averages profits over ten years, was 27.6 for American equities . That ratio turned out to be the peak for the cycle. As the problems at Bear Stearns, Lehman Brothers and others emerged, and as the world was gripped by recession, share prices plunged. By March 2009 the CAPE had fallen by more than half.
Central banks then kicked into action, slashing interest rates and buying assets via quantitative easing (QE). The stockmarkets recovered rapidly and the S&P 500 is now more than 50% higher than it was ten years ago. And the American stockmarket’s CAPE, at 29.2, is also higher than it was back then.
Investors might worry about equity valuations but what are their alternatives? A decade ago, the ten-year Treasury-bond yield was around 4.8%; now it is 2.3%. The Fed may have started to raise rates but the return on cash is still pitiful in nominal terms and negative in real (ie, after inflation) terms.
But at least the return on cash and bonds (held to maturity) is fixed in nominal terms. Investors have already suffered two big bear markets in equities this millennium. On each occasion, their losses in percentage terms were in the double digits. What might trigger another collapse?
There is no law that says the CAPE has to return to its long-run average of 16.7; indeed, the ratio’s mean over the past 30 years has been 24.5. Even in the depths of the 2008-09 crisis, the ratio only fell below the long-run average for ten months.
When investors accept a high CAPE for shares, they are confident about the ability of companies to maintain, and increase, their profits. One reason why the American market has powered ahead since the election of Donald Trump is that investors expect cuts to the tax rate on corporate profits, allowing more of those profits to be passed on to shareholders.
As Jeremy Grantham of GMO, a fund-management group, points out, there does seem to have been a step change in the level of American profits, as a proportion of both sales and GDP, since 1996. The corollary has been a lower share of GDP for labour, one factor behind voter discontent.
Mr Grantham suggests two forces behind the higher profits: enhanced monopoly power for American companies; and low real interest rates, which have allowed firms to operate with more debt. Both suggest there is something wrong about the way capitalism is currently working. If profit margins are high, then more capital ought to be ploughed into businesses until investment-led competition drives margins back down; that has not happened. And low real interest rates reflect, in part, the extraordinary measures taken by central banks to revive developed economies after the financial crisis.
The conventional threats to the equity market are twofold: a sharp rise in interest rates, which would hit indebted individuals and companies; or a decline into recession, which would dent profits. Neither looks imminent at the moment, which helps explain why Wall Street keeps hitting record highs.
But there are other ways that profit margins could be hit. Protectionist policies could disrupt the free flow of goods, services and people across borders. A credit crisis could emerge elsewhere in the world—in China, for example, where debt has been growing rapidly. Flashpoints in the Middle East or on the Korean peninsula could spark war.
Investors are not as complacent as they seemed a decade ago. In a poll conducted by Bank of America Merrill Lynch, a net 32% of global fund managers think shares are overvalued. Despite that, however, a net 40% have higher-than-normal holdings in shares.
In other words, investors are managing to be simultaneously bullish and skittish. By a large majority, fund managers expect global growth and corporate profits to be strong over the next 12 months; but they also know such expectations are already fully reflected in share prices. All will be well provided there are no shocks. But history suggests shocks have a nasty habit of occurring.
1. Which of the following is/are not the way(s) suggested in the passage using which profit margins could be hit?
(i) Steep rise in policy rate
(ii) Recession
(iii) Protectionist Policies
A) Only (i)
B) Only (ii)
C) Both (i) and (ii)
D) Both (ii) and (iii)
E) All are suggested
2. Which of the following statement correctly depicts the meaning of “Despite that,” as used in the passage (highlighted)?
A) Even though there are better stocks in the market still 40% people have higher than normal holdings in the stock.
B) Even though 32% of global fund managers have negative outlook, still 40% people have higher than normal holdings in the stock.
C) Even though price of stocks may fall in future still 40% people have higher than normal holdings in the stock.
D) Even after having 40% higher holdings of share, people believe that stocks are overvalued.
E) Due to low value of price, people have bought these shares
3. Why 10 years ago, were the investors confident even after troubled American Housing as mentioned in the passage?
A) As CAPE value increased.
B) They had a view that the impact of troubles on big economy would be contained
C) Due to easy recovery of stock market
D) Due to high yield on treasury bonds
E) All of these
4. What steps did Central Bank of America take after CAPE had fallen in 2009?
(i) Interest Rate cut
(ii) Increased the money supply in the economy
(iii) Buying and selling of assets.
A) Only (i)
B) Only (i) and (iii)
C) Only (i) and (ii)
D) Only (iii)
E) All of these
5. Why do investors buy shares with high CAPE even after knowing that they may falldrastically in future?
A) Due to the IMF report that predicted high CAPE in future.
B) Quantitative easing (QE) measures by Central Bank.
C) Due to recent cut in tax, resulting in visible profit growth
D) They have full confidence in the ability of the company to make profits.
E) All of these
6. What is/are the reasons for American firms to operate in profit even after debts?
(i) Protectionist Policy
(ii) Enhanced Monopoly Power
(iii) Low nominal Interest Rate
A) Both (ii) and (iii)
B) Only (iii)
C) Only (i)
D) Only (ii)
E) All
7. Which of the following will be the most suitable title for the passage?
A) Upcoming recession a challenge for global economy
B) Increasing dominance of America
C) Investors are both bullish and skittish about share prices
D) The impact of recession on broad economy
E) After effects of recession
8. Which of the following word means opposite to PLUNGED as mentioned in the passage?
A) bothered
B) opulent
C) intensification
D) shrink
E) insinuate
9. Which of the following word means opposite to IMMINENT as mentioned in the passage?
A) convenient
B) prospective
C) preordained
D) portending
E) distant
10. Which of the following word means same as COMPLACENT as mentioned in the passage?
A) collected
B) unsure
C) soothed
D) gratified
E) meander
1. A) Both (ii) and (iii) are suggested where (i) is not mentioned. It is said that sharp rise in interest rate can hit profit margin, but interest rate and policy rate are different things.
2. C) Overvalued shares are those whose price is more than its earnings outlook and hence the price may fall anytime. So even when the shares are overvalued and its price may fall anytime still 40% have higher-than-normal holdings in shares.
3. B) As mentioned in the first passage, most people agreed with Ben Bernanke, the Federal Reserve chairman……
4. C) The two steps are: slashing interest rate and buying assets via QE. First point is directly mentioned. Buying assets via QE means the Bank buys assets like government security in the market and in return increase the money supply as it has bought the asset so it will pay some money to the economy. So (ii) is correct. (iii) is wrong because it says about selling of assets. If the central bank sells the assets it means it will suck money from the economy that will worsen the condition even further.
5. D)
6. D) The two points mentioned for this in the passage are: enhanced monopoly power and low real interest rates. Now real and nominal interest rates are two different things. So only (ii) is correct.
7. C) When we read the passage carefully , we get an idea that the passage is centred around investors. A) cannot be the title as it talks about global economy and the passage is restricted to America. B) is also not suitable as nothing such is mentioned. D) The passage doesnot talks about the impact of recession. Recession is just a small part of the passage. Hence D) and E) are also not suitable. Now C) which is about recession and also reflects the view of author as mentioned in the last paragraph is the most suitable title.
8. C) plunged here means falled/decreased. Intensify means to increase
9. E) imminent – about to happen
10. B) complacent – satisfaction
1. Pipe A and B can fill a tank in 15 minutes and 20 minutes respectively. Both the pipes are opened to fill a tank. The time when the tank should be full, it was found that a leak pipe was also opened along with pipes A and B. It is turned off immediately and then after 5 minutes, the tank gets full. Find the time in which the leak pipe can empty the full tank?
A) 720/49 minutes
B) 728/49 minutes
C) 829/49 minutes
D) 832/49 minutes
E) None of these
2. The average age of 8 persons increased by 2 when a new person comes in place of one of them whose age is 26 kg. What might be the age of the new person?
A) 36 years
B) 42 years
C) 39 years
D) 44 years
E) 48 years
3. The area of the rectangle gets reduced by 10 if its length is increased by 2 and breadth decreased by 2. Also it increases by 14, if its breadth is increased by 3 and length decreased by 2. Find the original area of the rectangle.
A) 126 sq. units
B) 154 sq. units
C) 173 sq. units
D) 187 sq. units
E) 163 sq. units
4. Karan can complete a work in 60 days and Arjun can complete the same work in 5 days more than the number of days in which they both can complete work together. They both start the work and after 5 days, Karan leaves and Arjun starts working with 4/3 times efficiency as before. In how much time the work will be completed?
A) 12
B) 8
C) 10
D) 15
E) 18
5. There are 420 students residing in a hostel. If the students increase by 100, the expenses of the mess increase by Rs 500 per month, while the average expenditure per head diminishes by Rs 25. What is the original monthly expense of the mess?
A) Rs 105
B) Rs 120
C) Rs 135
D) Rs 180
E) Rs 165
6. A sum of Rs 6800 is deposited in two schemes. One part is deposited in Scheme A which offers 12% rate of interest. Remaining part is invested in Scheme B which offers 10% rate of interest compounded annually. If interest obtained in scheme A after 5 years is Rs 678 more than the interest obtained in scheme B after 2 years, find the part deposited in scheme A.
A) Rs 4200
B) Rs 3900
C) Rs 3400
D) Rs 2600
E) Rs 3000
7. 7 men, 5 women and 8 children together have to distribute 1740 books in a total 3 days. On the first day all distribute books. On second day 2 women and 3 children were absent and on the third day 3 men and 5 children were absent. If the ratio of the number of books distributed in a day by a man, a woman and a child was 5 : 4 : 2 respectively, a total of approximately how many books were distributed on the second day?
A) 650
B) 700
C) 510
D) 600
E) 570
8. A solution of sugar syrup has 35% of sugar. Another solution has 20% sugar. How many litres of the second solution must be added to 40 litres of the first solution to make a solution of 25% sugar?
A) 40 l
B) 60 l
C) 80 l
D) 70 l
E) 50 l
9. Mr. Ramesh opened a workshop investing Rs 50,000.He invested additional amount of Rs 10,000 every year. After two years his brother joined him with Rs 90,000. On completion of 4 years they earned a profit of Rs 2,20,000. Find the share of Ramesh
A) Rs 90,000
B) Rs 1,30,000
C) Rs 1,10,000
D) Rs 1,20,000
E) None of these
10. A tap can empty a cistern in 12 hours. If another tap B is on then cistern is emptied in 15 hours. If tap B can fill 10 Litre in a minute then find the amount of water which cistern can hold.
A) 30,000 litre
B) 40,000 litre
C) 25,000 litre
D) 36,000 litre
E) None of these
1. A) Pipes A and B can fill the tank in – 15*20/(15+20) = 60/7 minutes
But along with leak pipe, it took 5 minutes more. Let leak pipe can empty tank in x minutes
So A and B were opened for (60/7) + 5 = 95/7 minutes
And the leak was opened for 60/7 minutes
So (7/60) * 95/7 – (1/x) * 60/7 = 1
Solve, x = 720/49 minutes
2. B) Total age increased = (8 * 2) = 16 years.
Age of new person = (26 + 16) = 42 years.
3. B) Let length = x, and breadth = y
So xy – (x+2)(y-2) = 10
Gives 2x – 2y + 4 = 10………..(1)
And (x-2)(y+3) – xy = 14
Gives 3x – 2y – 6 = 14………………(2)
Solve equations, x = 14, y = 11
4. D) Let they both complete work together in x days
So Arjun in (x+5) days
So 1/60 + 1/(x+5) = 1/x
Solve, x = 15, So Arjun can complete work in 20 days
Now they work for 5 days so completed (1/60 + 1/20) * 5 = 1/3 of work
Remaining work = 2/3.  Arjun works with 4/3 times efficiency. So now he can complete whole work in 20/(4/3) = 15 days
So 1/15 * y = 2/3
Solve, y = 10
So total number of days = 5 + 10 = 15
5. C) Let original monthly expense of the mess = Rs x
So 520 (x – 25) – 420x = 500  [520 is (420+100)] Solve, x = Rs 135
6. D) (6800-x)*12*5/100 = x [ (1 + 10/100)2 – 1] + 678
68*12*5 – 60x/100 = 21x/100 + 678
Solve, x = Rs 4200
So in scheme A = 6800-4200 = Rs 2600
7. E) The ratio 5 : 4: 2 specifies the efficiency
In 3 days, total men = 7 + 7 + 4 = 18
In 3 days, total women = 5 + 3 + 5 = 13
In 3 days, total children = 8 + 5 + 3 = 16
So 18*5x + 13*4x + 16*2x = 1740
Solve, x = 10
So second day distribution:
7*5x + 3*4x + 5*2x = 57x = 57*10 = 570
8. C) 35% of 40 + 20% of x = 25% of (40+x) => 14 + x/5 = (40 + x)/4
=> (70 + x)/5 = (40 + x)/4 => 280 + 4x = 200 + 5x => x = 80 litres
9. B) Ramesh = 50000+60000+70000+80000=Rs 260000
Brother = 90000+90000 = Rs 180000
10. D) —-Hours————–Efficiency (Total Work = LCM 12, 15=60)
A = 12  ——————– 5
A + B = 15—————–4
Difference = 5-4=1 this is due to B
In 1 hour B can fill 10*60=600 L
1->600 L
60(total work)->60*600=36,000 L
Directions (1 – 5): Study the following information to answer the given questions:
Rohit, Rashmi, Sahil, Bhavna, Anish, Ekansh, Sheetal and Kavya live in a eight-storey building but not necessarily in the same order. The lowermost floor is numbered one and the topmost floor is numbered eight, they like eight colors, viz Red, Brown, Blue, White, Black, Yellow, Orange, and Green, but not necessarily in the same order.
Two persons live between Rashmi and the one who likes Black. The one who likes Orange lives on the first floor and he is not Sahil. Only two persons live between the top floor and the one who likes Blue. Ekansh lives on an even-numbered floor but not the second floor and he does not like Black.
Anish lives on an odd-numbered floor, but not on the first floor. The person who likes Brown lives on an odd-numbered floor but not on the third floor. Bhavna stays on the fifth floor and Rohit lives on the top floor. Yellow is not liked by the one who lives on the top floor.
Sheetal does not live on the seventh floor. Sahil does not like Orange. White is liked by the one who lives on the 4th floor. Green is not liked by the one who lives on the second or the top floor. Only two persons live between Sheetal and Bhavna. The one who lives on second floor likes Yellow.
1. Which of the following person lives at top floor?
A) Bhavna
B) Sahil
C) Rohit
D) Anish
E) None of these
2. What is the total of floor numbers on which Rashmi and Sheetal live?
A) 8
B) 6
C) 7
D) 9
E) 5
3. How many persons live between the floors of the ones who like white and orange?
A) None
B) One
C) Two
D) Three
E) More than three
4. Which of the following is true with respect to the given arrangement?
A) Sheetal does not like yellow color
B) There are 2 persons between Sahil and the one who likes blue color
C) Ekansh likes white color
D) Rashmi likes blue color
E) Kavya does not like orange color
5. Which of the following is the correct combination of Floor No : Person : color?
A) 6 : Kavya : Orange
B) 7 : Sahil : Green
C) 4 : Ekansh : Red
D) 3 : Anish : Black
E) 5 : Bhavna : White
Directions (6 – 8): In which of the following options 4th statement follows from the 1st three statement?
A) Some hope are fight. No dollar is time. All first are time. All hope are dollar
B) All hope are time. No dollar is time. All dollar is first. Some hope are not first.
C) No first is time. Some first is hope. All hope is dollar. Some dollar are not time.
D) All first is hope. Some hope is time. All time is dollar. Some first is time.
E) None is correct
A) All company is graduate. No graduate is grow. No grow is pass. No company is pass.
B) Some graduate is pass. All pass is grow. All grow is company. Some graduate is company
C) Some grow is pass. No graduate is pass. All graduate is company. Some grow is not company.
D) All pass is grow. All grow is graduate. Some graduate is company. Some pass is company
E) None is correct
A) Some real are not sector. All real are sector. No estate is frame. Some sector are not estate.
B) Some real are estate. Some estate is sector. No frame is sector. Some real is frame.
C) All real are estate. Some sector are not estate. Some sector are frame. Some sector are not real.
D) All frame are sector. No sector is estate. All estate is real. Some frame are not real.
E) None is correct
Directions (9-10): Point A is 8 m west of point B. Point E is 2 m east of point F. Point G is 3 m east of point H. Point E is 3 m north of point of point D. Point C is 9 m west of point D. Point G is 9 m north of point F. Point C is 6 m south of point B.
9. Find distance AH.
A) 7√6 m
B) 7√5 m
C) 6√6 m
D) 6√5 m
E) None of these
10. A person starts from point G in east direction. Walks for 6 m, takes a right turn, now walks for 5 m. Now he takes a left turn, walks for 3 m, then after two consecutive right turns he reaches point E. Find the distance travelled by him to reach point E.
A) 27 m
B) 25 m
C) 23 m
D) 24 m
E) 28 m
(1 – 5):
Floor No
1. C)   2. A)   3. C)   4. C)   5. D)  
6. C) In C) Using reverse (a) + (b) + (c) and solving in the order (b)+(c) i.e
No time is first + [Some first is hope + All hope is dollar]=> No time is first + Some first is dollar => Some dollar are not time.
7. B) Some+All+All = Some=> Some graduate is company.
8. C) Using the exceptional case II. i.e All A is B+ Some C is not B=> Some C is not A. We can find that in C) 4th follows .from All real are estate. Some sector are not estate
9. D)

Vertical distance = GF – (CB – ED) = 9 – (6-3) = 6
Horizontal distance = AB + (CD – (HG + FE)) = 8 + (9 – (3+2) = 12
Required distance AH = √(62 + 122) = 6√5 m
10. B)

6 + 5+ 3 + (9-5) + (3+4) = 25 m